Automotive News Europe — 2024-02-29
Automotive Industry
Volkswagen says economies of scale from joint purchasing, combined with innovations in design and engineering, will slash development time by more than 30%.
Volkswagen Group and Chinese electric vehicle partner XPeng said the first car they plan to develop together will be an SUV for which they will jointly source parts.
Under a "master agreement" for platform and software collaboration, the automakers said they will start a joint sourcing program for platform and vehicle parts used by both partners, leveraging scale to reduce costs.
The announcement marks a step forward in a partnership forged in July when VW said it would buy 4.99% of Xpeng for around $700 m with plans to jointly launch two EV models by 2026. The purchase was completed in December.
Volkswagen, which is trying to regain market share in China lost to local rivals, said economies of scale from joint purchasing, combined with innovations in design and engineering phases, will slash development time by more than 30% .
"In the world's largest and fastest growing EV market, speed is fundamental," Volkswagen Group board member and China chief Ralf Brandstatter said on Thursday 22 February 2024.
Cars produced through the partnership will carry the VW logo but feature a jointly developed platform based on the G9 "Edward" technology of the decade-old startup.
Volkswagen ceded its title of best-selling car brand in China to local EV manufacturer BYD in late 2022, as competition with EV makers combined with the storied automaker's reliance on petrol vehicles whose sales have been declining.
In 2023, Volkswagen said it would develop another manufacturing platform in China derived from its modular "MEB" platform for entry-level EVs and use more local components to lower cost.
It is also investing around €1bn ($1.08bn) in a new EV development and procurement center in Hefei city.
China's new energy vehicle sales fell 39% in January 2024 versus the previous month, the first such drop since August 2023, as a renewed discounting push led by Tesla failed to propel demand.
While many EV makers are racing to cut costs, Xpeng in February said it would hire 4,000 people in 2024 and invest millions of dollars in artificial intelligence as it seeks to survive what it described as a "bloody sea" of competition.